Additional practice set 2 · Challenge ← Back to lesson

Compound Interest: Additional Practice (Set 2)

12 multiple-choice questions, progressively harder.

Additional practice set 2 · Challenge 0 / 12 answered

Question 1 of 12

1
As $m$ grows without bound, the values $\left(1 + \frac{1}{m}\right)^{m}$ for $m = 1, 2, 10, 100, \ldots$ get closer and closer to:

Answer choices for question 1 A $2$ B $3$ C $e \approx 2.71828$ D $\pi \approx 3.14159$
2
You invest $2{,}000$ dollars at $5\%$ compounded annually for $3$ years. Using $1.05^3 = 1.157625$ , what is the balance?

Answer choices for question 2 A $2{,}300.00$ dollars B $2{,}310.00$ dollars C $2{,}315.25$ dollars D $2{,}315.00$ dollars
3
Two accounts each start with $1{,}000$ dollars at $6\%$ for $1$ year. Account A compounds annually, account B continuously. Which is true? Use $e^{0.06} = 1.061837$ .

Answer choices for question 3 A A and B end equal B A ends about $6$ dollars more C B ends about $60$ dollars more D B ends about $1.84$ dollars more than A
4
You invest $800$ dollars at $6\%$ compounded continuously for $1$ year. Using $e^{0.06} = 1.061837$ , what is the balance?

Answer choices for question 4 A $849.47$ dollars B $848.00$ dollars C $849.09$ dollars D $896.00$ dollars
5
You invest $600$ dollars at $10\%$ compounded semiannually for $2$ years. Using $1.05^4 = 1.21550625$ , what is the balance?

Answer choices for question 5 A $726.00$ dollars B $729.30$ dollars C $720.00$ dollars D $732.00$ dollars
6
On $10{,}000$ dollars at $4\%$ for $2$ years, how much more does annual compounding earn than simple interest? Use $1.04^2 = 1.0816$ .

Answer choices for question 6 A $0$ dollars B $4$ dollars C $8$ dollars D $16$ dollars
7
On $1{,}000$ dollars at $12\%$ for $1$ year, compare the balances from annual, monthly, and continuous compounding. Use $1.01^{12} = 1.126825$ and $e^{0.12} = 1.127497$ .

Answer choices for question 7 A continuous is smallest, annual is largest B annual is smallest, continuous is largest C monthly is the largest of the three D all three are equal
8
You invest $1{,}200$ dollars at $10\%$ compounded semiannually for $1$ year. Using $1.05^2 = 1.1025$ , what is the balance?

Answer choices for question 8 A $1{,}320$ dollars B $1{,}260$ dollars C $1{,}323$ dollars D $1{,}332$ dollars
9
You invest $1{,}000$ dollars at $8\%$ compounded continuously for $1$ year. Using $e^{0.08} = 1.083287$ , what is the balance?

Answer choices for question 9 A $1{,}083.29$ dollars B $1{,}080.00$ dollars C $1{,}082.43$ dollars D $1{,}008.33$ dollars
10
You invest $500$ dollars at $8\%$ compounded quarterly for $1$ year. Using $1.02^4 = 1.08243216$ , what is the balance?

Answer choices for question 10 A $541.22$ dollars B $540.00$ dollars C $540.80$ dollars D $544.00$ dollars
11
Under simple interest at $5\%$ , a deposit grows to $1{,}260$ dollars in $1$ year. What was the principal?

Answer choices for question 11 A $1{,}197$ dollars B $1{,}260$ dollars C $1{,}323$ dollars D $1{,}200$ dollars
12
You invest $900$ dollars at $5\%$ compounded annually for $2$ years. Using $1.05^2 = 1.1025$ , what is the balance?

Answer choices for question 12 A $990.00$ dollars B $992.25$ dollars C $990.25$ dollars D $999.00$ dollars

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